money or paper or any other thing where it was the intention and understanding of both parties that the identical thing should be returned (13). Such a deposit is to all intents and purposes a bailment (14). It has become a subordinate feature of the banking business, such deposits being now made the principal subject of the safety deposit business (15).

The various and varied transactions between bankers and customers, which have distinctive features of such definiteness as to impart a different character to the transactions and different legal consequences, are so constantly recurring in the banking business that they have given rise to a classification dependent upon the different consequences which, by law, attach to them.

Classified according to effect, deposits are: first, those where the title does not pass; second, such as pass the title from the depositor to the banker and leave him a debtor; in other words, mere loans upon demand (16).

This classification does not indicate the characteristic features, the presence or absence of which has the effect of changing title; it is, therefore, of little value as a classification. It is not strictly accurate, for in the first instance supposed the title does not always remain in the depositor.

(13) Morse on Banks, sec. 102 e. 183.

(14) Foster v. Essex Bank, 17 Mass. 479; Pattison v. Syracuse Nat. Bank, 80 N. Y. 82; First National Bk. v. Graham, 100 U. S. 699; Oulton v. German Sav. Soc., 17 Wall. 109-123.

(15) Indeed it has been made the subject of serious question whether a corporation with banking power had implied power to receive special deposits. Foster v. Essex Bank; Pattison v. Syracuse Nat. Bk., Note 14, above.

(16) Marine Bank v. Fulton Bank, Note 1, above; Pattison v. Syracuse Nat. Bank, Note 14, above.

Logical legal classification consists in bringing into view the characteristic features of the transactions; thus formerly all banks received packages, boxes or chests with the understanding, express or implied, to keep and have at all times the specific thing ready for redelivery. Later there arose the custom of establishing places where credits might be exchanged. This necessitated the receiving of deposits which the banker might treat as his own and pay out on the orders of his customers. In time, and by custom, the legal effect of the transaction was to make the money deposited, or the proceeds of the paper discounted, the money of the banker. By this means he accumulated his general deposit fund.

The convenience of business brought about still another transaction which consisted of receiving money or choses for some specific purpose other than redelivery, and not to be made a part of the general deposit fund. This is the specific deposit. It is frequently spoken of in opinions as though it were a special deposit, but it is distinguishable by the fact that the preservation of the identity of the thing is not essential, and that the banker has some active duty other than that of a mere custodian, and, therefore, it becomes a trust in the nature of a bailment. In special and specific deposits the title does not pass to the bank. In special deposits it does not pass from the depositor, but in specific deposits title may pass immediately or conditionally to the beneficiary, for whose benefit the deposit is made (17).

(17) Crandall v. Woodhouse, 197 Ill. 104; Englar v. Offutt, 7 Md. 78; First Nat. Bank v. Hummel, 14 Colo. 259.

With these characteristic elements in view, definition may be attempted.

§ 14. What is a general deposit? The appellation deposit effectually conceals the real nature of the transaction. It is a loan by the depositor, a borrowing by the bank under an agreement, express or implied, to pay upon demand or upon the written order of a customer. The legal effect is that the banker becomes the debtor of the customer, the owner of the money, and there is no trust relationship between the parties. The banker is not a bailee or custodian. A deposit without a qualifying agreement or business habit is presumed to be a general deposit (18).

§ 15. What is a specific deposit? A specific deposit is one where money or securities are delivered to a bank for some specified or particular purpose and not for entry on the general account. There is an active duty to be performed by the bank in reference to the money, which constitutes the banker a trustee. Title does not pass to the banker, who remains a trustee, though the title may pass to the beneficiary for whose benefit the deposit is made. This species of deposit is often confused with the special deposit, but there is the distinction that by contemplation of the parties the integrity and identity of the thing delivered need not be preserved, but may be transformed and transferred according to the contract of deposit (19). The importance of this distinction will appear more

(18) Morse on Banks, sec. 186; Association v. Jacobs, 141 Ill. 261; St. Louis & C. Ry. v. Johnson, 133 U. S. 577.

(19) Morse on Banks, secs. 185, 206; Crandall v. Woodhouse, Note 17, above.

clearly in connection with the treatment of the equitable doctrine of tracing trust funds, we being here concerned only with the creation of such a specific fund (20). See Vol. VII, Art. 3, §§ 91-94.

§ 16. Same: Illustration. In Cutler v. Am. Ex. Bank (21) the plaintiffs explained to the officers of the defendant bank that they wished to transmit money to their agent, Hall, at Leadville, and deposited money with the bank on its giving them a letter of credit to the bank of Leadville as follows: "Your account is credited this day $500., received from Cutler, Hall & Co., for use of J. S. Hall." The Leadville bank failed before receiving the money, indebted to the New York bank, which claimed that the deposit was general, and, having been placed to the credit of the Leadville bank, became the money of the Leadville bank, and consequently subject to the claim of the New York bank against the Leadville bank.

The

Justice Gray said: "The defendant became a depositary of a fund which was, by its own agreement, devoted to one particular purpose and to no other. defendant became a special depositary of the funds and bound itself to retain it until drawn out under the authority of the latter.

in question is not material.

The form of the writing

that the foreign bank's account was credited with the money, those words were controlled in their general application and sense by the clause, that it was 'for the use of Hall' . . It evidenced a special deposit (22),

made by plaintiffs, and warranted and protected the foreign bank in paying the sum mentioned to Hall, upon its production and surrender. As there was an express contract made with plaintiffs by defendant to do the particular thing, the defendant must be bound by its terms and legal effect. The compact was clear enough, and, whatever forms the defendant went through, they would not be allowed to change it, or to divert the moneys to any other purpose or use. The deposit was a special one for a designated beneficiary, and could not be used or dedicated by the defendant

No system of bookkeep

ing entries would be allowed to cause the plain agree

ment of the parties to miscarry.

The case of Bank v. O'Hare, 119 Ill. 646, was not unlike the present one."

§ 17. What is a special deposit? A special deposit is the deposit of some thing capable of manual delivery, whether it be chattel, chose or money, with the agree ment that the identical thing shall be held subject to the depositor's order. In the case of money, it is not essential that the identical coin or bills be preserved, but a special fund must be established and its identity preserved. The depository is a mere custodian without active duties and he is like a bailee (23).

§ 18. What are trust deposits? Another class of deposits sometimes confused with general or special deposits, are those where a trustee deposits money in his own name or as trustee. These cases do not involve the question

(23) Morse on Banks, secs. 183, 190.